Are Diamonds a Good Investment?

Diamonds are as alluring as they can be pricey. These precious stones have long been a symbol of wealth and prestige, worn for centuries by the most elite. Supplies increased in the 1970’s with the discovery of new diamond mines, prompting the masses to drive up demand. But it wasn’t until the 1980’s, when DeBeers famously coined the phrase, “a diamond is forever,” that diamond sales really skyrocketed. Nowadays, they’re the choice gemstone for engagement and wedding rings and the envy of every girl who dreams of wearing one of these gorgeous accessories on her finger.

A diamond’s beauty is undeniable, but what about its value? One question we’re frequently asked is, “are diamonds a good investment?” This question is impossible to answer with a simple yes or no, as there are pros and cons to every kind of investment option. But there are some steps you can take when purchasing a diamond to ensure a more generous return down the road. There are also some common mistakes you’ll want to avoid. If you’re considering purchasing a diamond as an investment, read on to learn how you can make the most of your expenditure.

Pros of Investing in Diamonds

For the past several years, the use of diamonds as an investment option has greatly increased. There are a number of reasons why diamonds are a desirable commodity to invest in. For starters, a diamond takes up practically no space and is easy to safely store. Unlike gold bullion or a work of fine art, a diamond is tiny and often contains more value than other precious objects or collectibles. You can store a diamond in a small safe, while other valuables may require more space. Additionally, diamonds are the hardest natural substance on earth, meaning they are incredibly durable. As long as a diamond is safely stored and is not lost or misplaced, it will stay in pristine condition.

Cons of Investing in Diamonds

Like any investment option, there are risks to investing in diamonds. Unlike gold, there is no general price index for diamonds. Instead, they’re valued on an individual basis using criteria set by the GIA. The price of diamonds is greatly dependent on market supply and demand, factors which are controlled and manipulated by the major diamond manufacturing companies. You could potentially find yourself paying too much for a diamond, and ultimately losing money when it comes time to cash in on your investment. Another disadvantage to investing in diamonds? They don’t make a good short term investment. You’ll have to practice patience to see them appreciate over the long run. If you’re prepared to wait it out, there are some guidelines you can follow to ensure you get the most out of your money.

How to Invest in Diamonds

 

1. Learn the Basics

You wouldn’t buy a new car without doing your homework first, right? The same kind of consideration should be given to buying a diamond. At the very least, know the basics of diamond grading, more commonly known as the 4 Cs. Being armed with this information before you shop makes you less susceptible to scammers who may try to overcharge you.

2. Know Your Budget

Setting a budget before you shop is always wise, and diamonds are no exception. This is another measure that will help keep you from overspending. Keep in mind that diversifying your portfolio is important, and diamonds should not be your only investment.

3. Compare Diamonds

When purchasing a diamond as a means of investment, you don’t necessarily want to buy something super common. A simple 1-carat, D-color, very slightly included (VS) diamond, for example, is fairly standard and won’t produce much of a return down the road. But a fancy colored diamond, such as pink or blue, is more unusual and will be easier to sell later on. Similarly, diamond shapes that are popular, like cushion cuts and round brilliant cuts, are likely to have a higher resale value. We strongly advise you to only buy diamonds that are certified. A certificate issued by the GIA is ideal, as they’re the industry’s most well respected experts on diamond grading. A diamond without a certificate will be much more difficult to sell, so this is one item you don’t want to overlook.

4. Have Reasonable Expectations

If you’re looking for a get-rich-quick scenario, diamonds are not the investment for you. Diamonds take time to increase in value, so if you’re just considering the short term, you may want to invest in something else. Historically, diamond values have risen, but at a very gradual rate. It may take some time for your diamond’s value to appreciate, but at least in the interim, you can enjoy your investment. Often, those who invest in diamonds will wear their valuables until they decide it’s time to part with them.

Shop Exquisite Diamonds in San Diego

Whether you’re ready to invest, or simply love diamond jewelry, we can help you find what you’re looking for at Leo Hamel Fine Jewelers in San Diego. Our incredible selection of diamond jewelry features both classic, timeless designs as well as trendier, more contemporary styles. No matter your taste, budget, or investment experience—there’s something in store for you at Leo’s!

 

source https://www.leohamel.com/blog/index.php/2018/12/investing-in-diamonds/